7 Financial Disasters to Avoid

Don't let these preventable money mishaps happen to you.

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By Sarah Kaufman, Manilla.com

Apr 17, 2014

1. Under-Saving for Retirement
When it comes to retirement savings, the phrase, "Time is money," has never been truer, but there are plenty of saving strategies for people who weren't able to save during their younger years. The most important is to cut costs wherever you can so that you can put more money into your retirement savings accounts, like a 401(k) or individual retirement account (IRA). Bank your raises, so any increase in income that comes your way goes directly toward retirement savings. Reevaluate your current insurance policies and see where you can reduce coverage or cancel to put more toward retirement savings.

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2. Burying Yourself in Debt
If you haven't racked up credit card debt, don't start now. Doing so will not only hurt your credit score, but it'll cost you tons of money in interest, which is an unnecessary expense. If you're already buried in debt, quickly create a plan to get out. For starters, stop using credit cards to make expenses (unless you're paying off the bill in full each month). Reevaluate your budget to see where you can cut back on spending to make more room for higher debt payments, which will save you money in interest and help you get out of debt faster.

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3. Having a Blowout Fight with Your Spouse Over Money
A whopping 65% of people asked said they argue about money with their partners, according to a survey from account management service Manilla.com. But 81% of them said that automated financial organization services, like Manilla, helped minimize those arguments. First, communication is key, so talk to your partner about your short- and long-term goals. Revisit this conversation every six months to see if anything has changed on either end. Second, consider using services and apps designed to increase visibility and maximize financial sharing, such as Manilla's Bill Share feature. Bill Share lets you securely collaborate with your spouse, child, parent, accountant, roommate or anyone else to manage your bills and accounts, so everyone knows what's going on with the bills.

4. Covering Yourself (or Your Kids) with a Mound of Student Loans
Almost 60% of the 20 million Americans who attend college every year borrow money to cover costs, according to the Chronicle of Higher Education. That just goes to show that if you're considering taking out money for your or your kids' education, you're not alone. However, student loans, though arguably a good investment, can eat up a hefty chunk of your or your kids' monthly budget post-graduation. The solution? Plan ahead and look at all option. Contribute to a 529 plan as soon as you can put money aside for your education. Apply for grants and financial aid by filling out the Federal Application For Student Aid (FAFSA). Look for scholarships by visiting websites like FastWeb, Petersons, and The College Board.

5. Buying More House Than You Can Handle
Just because the bank thinks you can handle a certain mortgage doesn't mean you can. When you're planning to buy a house and determining what you can afford, make sure to factor in all costs — not just the mortgage. This includes expenses like maintenance costs, repairs and upkeep, heating and cooling, home improvements, and even your commute to work every day.

6. Getting a New vs. Used Car
The minute you drive your new car off the lot, it depreciates in value by 15 to 25%. Why pay full price for a brand new car when it's going to be worth as much as a used one the second you drive away? Consider all of your options and see if buying used is right for you.

7. Not Saving for Emergencies — And Then Having an Emergency
Emergencies happen, so it's important to be prepared. Saving even just a small amount each month could help you in the event of a job loss, job change, medical expenses or natural disaster.

Sarah Kaufman is the editor-in-chief of The Manilla Folder at Manilla.com, a free service that helps you manage and share your bills, finances, utilities, daily deals, travel and rewards programs, healthcare accounts and subscriptions — all in one place.